Healthcare is thriving in the zombie economy now, but will it last?

The crisis has dramatically affected the four major economic groups, creating half dead, half alive zombies: banks, governments, companies and consumers. The healthcare sector has enjoyed insulation from the worst effects of the zombie economy, but how long can it last?

PA Consulting Group's book 'The zombie economy' discusses the challenges facing the healthcare sector in the post credit crunch world and asks how will it handle the perfect storm waiting for it.

To order your free copy of 'The zombie economy' please click here.

The healthcare sector is insulated from the effects of the zombie economy – so far. People still get ill in a recession, so the sector is defying the trends, generating cash and delivering predictable and attractive liquidity. However, this may not last as the economic crisis could have a major, negative impact on healthcare payers - governments, insurers, individuals - and, by extension, on the sector in the next decade.

Healthcare can not avoid the force of the zombies 

Emerging budget pressures mean that healthcare payers must all spend less and prioritise in the zombie world. At the same time, the demand for care is growing because of:

• an ageing population

• rising expectations of care

• significant increases in the prevalence of lifestyle diseases across all regions

• the development of new treatments.

So the sector's current out-performance is likely to be short-lived.

The emerging budget pressures means payers are increasingly unable to accept the prices and reimbursement levels that suppliers desire. That pressure, coupled with the imminent patent expiry of big brands, creates a perfect storm in healthcare.

How will the sector survive the zombie economy? 

The branded healthcare companies need to focus on developing innovative products, and cost reduction initiatives, and take radical action to survive, including:

• developing propositions which are more aligned to the demands of all of customers – physicians, payers and patients

• exploring new elements to products with perceived value for money

• increasing associations with external sources of new technologies and potential products to realise greater cost efficiency

• defensive mergers, which are already in evidence, the first among the players has been Pfizer’s acquisition of Wyeth in late 2009.

While the healthcare industry appears buoyant relative to other industries, the combination of the recession and the dynamics of the sector will have an impact in the first half of the next decade.

If they are to avoid the effects of the zombie economy, healthcare companies must prepare for lasting and fundamental change in how they source and  develop the next generation of products and how they engage with their more diverse and demanding customers.

To order your free copy of 'The zombie economy' please click here.

To discuss how to steer your business successfully through the zombie economy please contact us now.